Exporting US $ 32.6 billion worth of apparel annually, the apparel industry of Vietnam is known for sportswear, workwear, jeans and fashion garments. Recently, surpassing Bangladesh, Vietnam grabbed the second position in the global apparel exports during the first half of 2020. Also, as the EU-Vietnam Free Trade Agreement (EVFTA) came into force lately, garments are reduced by 42.5 per cent of tariff lines. The growth potential is quite evident for all to see.
It is pertinent to mention here that according to Vietnam Textile and Apparel Association (VITAS), Vietnam’s apparel companies are dependent on foreign sourcing for 60 per cent of their supplies (raw materials), mostly from China. And now as more and more companies are maintaining a distance from China, Indian companies have an opportunity to become part of these supplies.
India missing opportunities… completely!
Cotton and man-made staple fibres are the major textile products as far as India’s export to Vietnam is concerned. (See table below). At the same time, all kinds of yarns and fabrics are worth even less than US $ 20 million. It shows that Indian fabric manufacturers are missing opportunities completely. And this is despite a lot of efforts at various levels, as many companies, from time to time, participated in the sourcing events organised in Ho Chi Minh City (the largest city and a major apparel production hub of Vietnam).
Language and logistics have been two fundamental challenges for Indian fabric mills for many years now. Indian companies exporting or exploring Vietnam market have even found solutions for these challenges, like to fight the language battle, they have Vietnamese professionals who are fluent in English, and to overcome the logistics challenge and quick delivery, Indian mills are keeping some stock in Vietnam. Majority of Vietnam’s exporters use the fabric of nominated suppliers, so Indian companies are also getting nomination from buyers. Despite that, there hasn’t been much growth for these companies because the majority of Indian mills are not able to offer competitive prices compared to China. China and Vietnam share close relationships, be it for trade or culture. Both the countries also share their border, so naturally, Vietnamese companies’ priority is to source from China.
Anubha Industries, Surat, a leading denim mill of India, tried to explore Vietnam and participated in sourcing events too, but in the last 2 years, it could finalise only one order. Amit Desai, Senior Manager – Exports Market, Anubha Industries, said “Despite all the best efforts, there’s been an average 20-day difference as far as lead time is concerned, and there is no solution to this challenge. We can’t stock all kinds of fabrics in Vietnam. Even buyers are not much enthusiastic as far as nomination for Vietnam is concerned, especially due to the price challenge. Honestly, I don’t see any solution or way to increase business with Vietnam.”
Rajesh Manwani, Senior GM, International Sales & Marketing, Bhaskar Industries, agrees with the same as he also shares a similar experience. His company has been putting efforts for the Vietnamese market for a long time now, but to no avail.
At the same time, good thing is that few companies continue to dig the Vietnamese market, and they are hopeful that one day they will have a better share in the same. KG Fabriks, Coimbatore, is one of the well-known companies offering sustainable denim fabric. And though it has been exploring Vietnam for 3 years, there’s been no success yet for the company. Recently, it appointed a professional in Vietnam and is geared up to grab the share. “Vietnam has proved to be a very difficult market for us, and as compared to many other countries where we are exporting, we have a very small share in Vietnam. We have to see whether our efforts work or not. Though India can’t beat China as far as price is concerned, we can probably beat China in terms of adding value to the product,” Srihari Balakrishnan, MD, KG Fabriks, told Apparel Resources.
He further added that a lot of Indian professionals are working in Vietnam’s apparel industry, and the company is in touch with them to grow business there. “Vietnam is a very price-conscious market compared to other apparel manufacturing countries. We are targeting exporters as well as Vietnam-based brands,” he underlined.
As KG Fabriks is known for sustainable denim and the use of latest technology in overall business, other fabric mills have to identify where they can add value and attract Vietnamese companies.
It must be mentioned here that due to the above-mentioned challenges and few individual reasons, many top players don’t have any business with Vietnam. Vardhman Group is one of them. A senior official from the company confirmed the same to Apparel Resources without sharing any specific reason. A chunk of the industry feels that if top players focus on this market, it will create some space for medium level companies too.
India’s main export to Vietnam
| Product | 2018-19 | 2019-20 | Growth (%) |
| Cotton | 455.12 | 206.06 | -54.72 |
| Man-made Filaments | 49.01 | 38.00 | -22.47 |
| Man-made staple fibres | 47.74 | 44.25 | -7.32 |
India’s main import from Vietnam
| Man-made Filaments | 109.96 | 81.22 | -26.14 |
| Silk | 63.03 | 77.11 | 22.35 |
Source: Ministry of Commerce (India) US $ million
Ronak Rughani, Chairman, the Synthetic & Rayon Textiles Export Promotion Council (SRTEPC), also believes that Vietnam is a potential export market for India, especially for MMF textiles. As per him, currently, we have a very good rapport with Vietnamese buyers and many of them have already been sourcing from India. The India-ASEAN FTA, in which Vietnam is also a partner country, is an additional advantage for India. Therefore, there is a tremendous export prospect in the Vietnamese market.
And to grab a good share, SRTEPC has been in constant touch with leading buyers from Vietnam. “Textile buyers regularly visit SRTEPC flagship export promotion programme ‘Source India’. Even in the recent virtual Source India event, we advertised widely in Vietnam through our Indian Embassy and around 30 buyers visited the show. Efforts of this Council to capitalise on the emerging opportunities in Vietnam have been consistently going on. It is expected that we will be able to gain a major share in the Vietnam MMF textile market very soon,” said Ronak.
To promote mutual trade between India and Vietnam, the Vietnam embassy in India organises Indo-Vietnam Business Forum in Textile and Healthcare. In one such forum, Pham Sanh Chau, Ambassador of Vietnam to India, assured full support to the Indian entrepreneurs willing to expand business with Vietnam. As now learning from COVID-19, everyone is working to reduce its dependency on China, and Vietnam is not an exception. By adding value for Vietnam, they can serve better compared to China.
